Illustrative Scenario: Sam — Failed Construction Lien | Frontier Law

Disclaimer: This scenario is fictional and for general information only. It does not constitute legal advice. Every situation is unique, and the information here may not apply to your specific circumstances. For advice tailored to your situation, consult with a qualified legal professional licensed to practice law in Ontario.

The Scenario

Sam is a general contractor who completed a major renovation project for a property owner in Mississauga, Ontario. The project took six months, and Sam finished the work in early November. The owner was supposed to pay the final invoice of $85,000 by the end of November, but payment never came.

Sam tried to contact the owner multiple times, but the owner stopped responding. In early December, Sam learned that the owner was trying to sell the property. Sam was worried about getting paid, so they decided to register a construction lien against the property.

Sam registered the lien in mid-December, thinking this would secure their payment. However, when Sam tried to enforce the lien a few months later, they discovered that the lien had expired and they had lost their right to lien the property.

The Legal Issue Raised

This scenario raises questions about:

Lien Registration Deadlines: When must a lien be registered to be valid?
Lien Perfection: What does it mean to “perfect” a lien, and when must this be done?
Lien Expiry: When does a lien expire, and what are the consequences?
Preservation of Lien Rights: What steps must be taken to preserve and maintain lien rights?

How These Issues Are Commonly Analyzed

When analyzing these issues, courts and legal professionals often consider several factors:

Lien Registration Requirements

When analyzing lien registration, courts often consider:

Whether the lien was registered within the required time (typically 60 days from last work or supply)
Whether the legal description of the property is correct
Whether all required information was included in the lien registration
Whether the lien was registered in the proper land registry office

Determining “Last Work or Supply”

When determining the deadline for registration, courts often consider:

What constitutes “last work or supply” for the project
Whether warranty work or repairs extend the deadline
Whether work done after the main project completion counts as “last work or supply”
The distinction between work that is part of the original contract versus separate warranty work

Lien Perfection Requirements

When analyzing lien perfection, courts often consider:

Whether a court action was started within the required time (typically 90 days from registration)
Whether the necessary documents were properly served on the property owner
Whether the court action was properly commenced
Whether there were any delays or issues in the perfection process

Lien Expiry and Consequences

When analyzing expired liens, courts often consider:

Whether the lien expired due to failure to perfect within the required time
Whether the deadline for registration has passed (preventing a new lien)
What remedies remain available after a lien expires
The difference between secured (lien) and unsecured creditor status

Why This Area Causes Confusion

This area of law causes confusion for several reasons:

Strict Deadlines: The deadlines in the Construction Act are strict and unforgiving. Missing a deadline by even one day can result in losing lien rights entirely.
Two-Step Process: Many people don’t realize that registering a lien is only the first step—the lien must also be “perfected” by starting a court action.
Complex Timing Calculations: Determining when “last work or supply” occurred can be complex, especially if there were warranty repairs, cleanup, or other work after the main project.
Legal Description Requirements: Getting the legal description of the property correct is crucial, and errors can invalidate the lien.
Perception vs. Reality: Many contractors think that registering a lien automatically secures payment, not realizing that perfection is also required.
Limited Window for Action: The deadlines are relatively short (60 days to register, 90 days to perfect), and missing either deadline can be costly.

Key Takeaways

Construction liens have strict deadlines that must be met—missing a deadline by even one day can result in losing lien rights
Registering a lien is only the first step—the lien must also be perfected by starting a court action within the required time
Determining “last work or supply” can be complex and is crucial for calculating registration deadlines
Getting the legal description of the property correct is essential—errors can invalidate the lien
Lien rights are powerful but can be lost if procedures aren’t followed exactly
Once a lien expires, the contractor may still be able to sue for payment but loses the security of the lien